CUNA’s Exam Survey Shows Room for Improvement

The good news revealed in CUNA’s inaugural national exam survey results is that the NCUA is already addressing key findings such as the overuse of Documents of Resolutions and examiners pressuring credit unions to follow guidance and best practices as if they were regulations.

The bad news is that 25% of responding CEOs said they were dissatisfied with their most recent exam, a number CUNA Chief Economist Bill Hampel said has room for improvement.

“The rate of dissatisfaction is never going to be zero,” said CUNA Chief Economist Bill Hampel, “but it would be nice to move in that direction

The exam survey, modeled after a programlaunched by the New Jersey Credit Union League in 2012 that targeted all credit unions in Region II, aims to provide CUNA with national baseline figures from which to gauge future trends in federal and state exam processes. CUNA debuted the exam results at its Governmental Affairs Conference Monday in Washington.

The online survey, managed by CUNA and the leagues, was conducted in December 2012 and January 2013, and generated a response rate of approximately 25%, or about 1,500 responses, the trade group said.

Overall, 60% of credit union CEOs surveyed said they were satisfied with their exams compared to the dissatisfaction rate of 25%. Credit unions that reported being dissatisfied with their exams were more likely to be state-chartered credit unions with more than $250 million in assets, and therefore subjected to joint exams. Dissatisfied credit unions also tended to be undercapitalized, with net worth ratios between 5% and 6%, and saw their examiner assign a riskier CAMEL rating after the exam.

The survey also revealed that 43% of respondents received one or more DORs during their last exam. CUNA Deputy General Counsel Mary Dunn said the ability to quantify the use of DORs will be helpful as her trade works with the NCUA to reduce the use of the document. Previously, Dunn said, CUNA was only able to provide anecdotal feedback to the regulator on the issue.

“The biggest weakness in any advocacy program is a lack of actual information and hard fast data that substantiates your claim,” she said.” This allows us to sit down with regulators and show them what the data indicates, that there are too many DORs out there.”

Paul Gentile, CUNA’s executive vice president of strategic communications and engagement, agreed with Dunn. He said he launched the survey in New Jersey last year as president of the NJCUL because “credit unions are very vocal about exams that don’t go well, which is good, but the problem when advocating for credit unions is those are one-off stories.”

After presenting NCUA Director of Examination and Insurance Larry Fazio with the Region II findings last year, Gentile said he was “very pleasantly surprised” with the regulator’s response. Exam scheduling problems with New Jersey credit unions were revealed in that survey, and Gentile said the NCUA has already remedied the problem.

The NCUA said it had not yet reviewed the survey results and had no comment.